Phoenix confirms potential Abbey Life takeover, eyes more deals

Insurer Phoenix Group has announced that it is in advanced talks with Deutsche Bank for the potential sale of Abbey Life, the lending giant’s insurance business in the UK.

Confirming earlier media reports, Phoenix said in a recent statement that it is evaluating a potential transaction with the German bank.

“Phoenix is in advanced discussions with Deutsche Bank in relation to a possible acquisition of Abbey Life,” the company said.

However, it clarified that there can be no certainty that the discussions will lead to a transaction.

Bloomberg and Reuters reported last week that Phoenix was planning to raise about £800 million to help fund the purchase of Abbey Life. The companies were expected to finalise the deal within the next couple of weeks.

With a major deal now in the pipeline, Phoenix also reiterated that it continues to explore further acquisition opportunities in the UK closed life sector.

Eamonn Flanagan, an analyst at Shore Capital Group with a hold recommendation on Phoenix shares, believes that the Abbey Life deal could reinforce Phoenix’s status as a specialist closed life fund consolidator.

“This deal could be the making of Phoenix as an acquisition vehicle for closed life funds,” Bloomberg quoted Flanagan as saying in a note to clients.

“Figures quoted in the past suggested that Abbey Life’s embedded value was close to two billion pounds with the purchase price mooted at one billion pounds,” Flanagan added.

Phoenix CEO Clive Bannister has said that the impact of regulatory changes will bring several opportunities, as open life companies are forced to reappraise their business models and strategies for their legacy policies.

“Together with an operating model specifically designed for closed life fund consolidation, the Group is well placed to generate value from further acquisitions,” Bannister said in a statement in August.

Since the referendum on 23 June 2016, there has been a lot of uncertainty in many sectors, but for the UK's insurance and long-term savings industry, the largest in the EU and third largest worldwide, the shockwaves are likely to be felt for some time